The Tail that Wags the Dog: The Problem of Pre-Merit-Decision Interim Fees and Moral Hazard in the National Vaccine Injury Compensation Program

40 Pages Posted: 6 Jan 2015 Last revised: 5 May 2015

See all articles by Timothy M. Todd

Timothy M. Todd

Liberty University School of Law

Date Written: February 7, 2014

Abstract

Despite its laudable intent, the National Vaccine Injury Compensation Program (VICP) is broken. The VICP is designed to compensate those injured or killed by vaccines. The problem is that the current practice in the VICP allows private attorneys to withdraw from a case before any decision is rendered on the merits and get paid in full for their attorneys’ fees and investigative costs with tax dollars — even if the case ends up a total loser.

Moral hazard is the economic phenomenon that insurance against loss reduces incentives to prevent or mitigate that loss. In the VICP, that insurance is the taxpayer paying attorneys’ fees and costs of even losing parties. This Article therefore argues that the VICP paying pre-merit-decision interim fees is contrary to law and, moreover, is bad public policy due to the moral hazard that results when neither the client nor the client’s lawyer bear the economic risk of loss and the cost of litigation. This moral hazard in the VICP can create needless litigation, clog federal court dockets, promote the churning of client files, and encourage lawyers to not finish cases. This Article solves the problem by using bedrock principles of statutory interpretation to demonstrate that a decision on the petition’s underlying merits is required before any payment of attorneys’ fees can be made in the VICP.

Keywords: National Vaccine Injury Compensation Program, National Childhood Vaccine Injury Act, vaccine, moral hazard, attorneys fees, statutory interpretation, statutory construction, Court of Federal Claims, Special Master, Federal Circuit, litigation

JEL Classification: I10, I18, I19, K00, K30, K32, K40, K41, K49, Z00

Suggested Citation

Todd, Timothy M., The Tail that Wags the Dog: The Problem of Pre-Merit-Decision Interim Fees and Moral Hazard in the National Vaccine Injury Compensation Program (February 7, 2014). Kansas Law Review, Vol. 63, No. 1, 2014, Available at SSRN: https://ssrn.com/abstract=2545470

Timothy M. Todd (Contact Author)

Liberty University School of Law ( email )

1971 University Boulevard
Lynchburg, VA 24515
United States

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